Despite extending the largest budgetary assistance to the Philippines, the Asian Development Bank (ADB) assured there won’t be any changes in its Country Partnership Strategy (CPS) on account of its coronavirus disease 2019 (Covid-19) pandemic response.
In a virtual briefing, ADB Philippines Country Director Kelly Bird told reporters the financing to be used for its projects contained in the CPS will not be affected by the loan it extended to the country.
On Friday, the ADB announced that it has approved lending $1.5 billion to the Philippines, the largest budgetary support granted by the ADB, to boost the country’s response to Covid-19.
“[The $1.5 billion is] in addition to our normal program. Having said that, of course, our program becomes much larger and, as I mentioned before, we’re closely working with government on our program,” Bird said.
“We’re monitoring it and we’re [going to] remain flexible; and we’ll take kind of guidance from government on the scheduling and approval of our programs and projects. But we’re closely monitoring the program,” he added.
Bird said most of its projects and programs in the Philippines under the CPS 2018 to 2023 and the Country Operations Business Plan (COBP) 2020 to 2022 are on track for approval by the ADB Board this year, specifically in July.
He assured that ADB is working closely with the government to monitor any changes that will affect its 2020 program in the Philippines. This includes efforts to prioritize, especially when it comes to government’s infrastructure program, called the “Build, Build, Build” (BBB).
“For the infrastructure projects, you’ve heard from the government that the BBB infrastructure programs are going to be critically important to economic recovery because it’s creating help to get many Filipinos back to work,” Bird said.
The loan for the Covid-19 response program of the Philippine government is supported by ADB’s Countercylical Support Facility Pandemic Response Option (CPRO).
Bird said the $13-billion worth countercyclical facility is part of the ADB’s Covid-19 pandemic response package of assistance worth $20 billion.
The Philippines projects and programs stated under the CPS and COBP are usually funded by ADB‘s Ordinary Capital Resources (OCR), co-financing arrangements between ADB and other institutions, and/or trust funds that are administered by the Manila-based multilateral development bank.
The first $500 million that the Philippines can tap from the ADB’s $1.5-billion facility will be disbursed in US dollars amounting to $250 million and in Euro equivalent for the other half of the amount.
This portion of the loan is payable in 10 years inclusive of a three-year grace period. Bird said this is shorter compared to their other loans. The interest rate to be used for the loan is the London Interbank Offered Rate (Libor), a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
The remaining $1 billion will also be divided equally into the US dollar and Euro equivalents of the amount under the terms of the loan accord. This amount is payable in five years inclusive of a three-year grace period.
The disbursement of the first $1-billion tranche is expected this month while the remaining $500 million may be disbursed on or before June 20, Bird said.